Clearing is a financial process that facilitates the settlement of transactions between parties, typically in the context of securities or derivatives trading. It involves the confirmation, matching, and settlement of trades, ensuring that both buyers and sellers fulfill their obligations. This process is often managed by a clearinghouse, which acts as an intermediary to reduce the risk of default. The clearinghouse guarantees that trades are executed smoothly and efficiently, providing a level of security for market participants. By managing the transfer of funds and securities, clearing helps maintain market stability and confidence, making it essential for the functioning of financial markets like stock exchanges and futures markets.